BYD Auto, the Chinese electric vehicle (EV) manufacturer, intends to construct a manufacturing facility for car parts in Vietnam, reported Reuters, citing three people aware of the plan.

This move is expected to cut down its dependence on China and boost its supply chain in Southeast Asia.

According to a source, it plans to invest more than $250m in Vietnam.

This investment will expand BYD Auto’s parent BYD Co’s presence in the country.

BYD Co’s electronic unit manufactures solar panels.

The carmaker, backed by Warren Buffett’s Berkshire Hathaway, has been expanding in Asia, including Singapore and Japan, as well as in Europe. It manufactures plug-in hybrids and pure EVs.

With its investment in Vietnam, BYD plans to boost capacity, rein in costs and diversify production from its operations in China, which is witnessing strong demand for EVs.

Meanwhile, discussions are underway to choose a location for the Vietnam facility, one of the sources said.

Another source said that construction is intended to commence by mid-year.

It is not clear what car components would be developed in Vietnam and if it would consist of batteries or battery packs, reported the news agency.

BYD intends to lease 80ha of industrial land, which will more than double its footprint in the country, where it currently has leased 60ha.

The new Vietnam plant will export EV components to the assembly plant to be constructed in Thailand besides serving the local market, added a source.